how to extend a basement door?

I have a basement door that is about 2 inches off the ground and in
the winter I can feel the cold air coming in from the basement. I
bought one of those pads that hook under the door but the gap is too
large to create a decent seal so I'm thinking about extending the
door. Is it as easy as cutting a piece to fit and screwing it on? Is
there a way to do it so it looks somewhat invisible? I'm also worried
about the seasonal swelling. How much space should I leave?

Could be that easy.
Might be easier. Depends on if it's acceptable to you and if it will
work in your case.
I'd say leave a half inch.
http://www.acehardware.com/product/index.jsp?productId (06033&cp=&parentPage=search&searchId299227053

--
Red...

"If women don\'t find you handsome, they should at least find you handy."

What kind of door is it - wood? fiberglass? steel? other?
What is the bottom strip made of? - wood? fiberglass? steel? other?
It would be easy to screw an extension onto the bottom if there is a
thick enough wooden strip inside the shell of the door, but if it's a
foam-filled steel door, you might not have much for the screw to grab
on to. It could still be done, but you would need to use something
other than just screws.
As far as "invisible", it will once again depend on how the repair is
made. - If the door can be painted, then wood putty, bondo, caulk or
any other method of hiding the seam should work.
The gap would be dependent on the type of threshold you have. Go look
at a few similiar doors at the borg or a window and door dealer and
see how they deal with the same type of door/threshold.

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